LNG Trade To Grow by 8% in 2019, Australia Forecast to become largest LNG exporter in 2020, LNG fleet projected to outnumber VLCC by 2026
The annual review of the LNG shipping markets (“LNG Trade & Transport”) is now available from Clarksons Research. Steve Gordon, Managing Director of Clarksons Research, commented, “Global trade in LNG continues its strong growth phase, with an expected 8.4% growth in 2019 and 7.4% in 2020 (11.5% and 12.3% by tonne miles). Recent export growth has been dominated by Australia and the US, while China has driven import growth (60% of import growth in 2018). With 93mt pa of export capacity under construction, and a further 313mt pa of capacity at FEED, growth potential remains strong. This trade expansion, combined with high day rates for vessels trading on the short term market over the past twelve months, has supported newbuilding orders totalling USD 17 bn since start 2018 and helped build a total newbuilding orderbook of 25% of the fleet (USD 24.5 bn). Our longer term modelling now suggests that the LNG fleet will outnumber the VLCC fleet by 2026. We also see growing interest in small scale LNG, FSRU, FLNG and, increasingly, LNG as a marine fuel.”
Other highlights of the review include:
- Strong LNG growth phase continues, with volumes projected to expand by 8.4% in 2019 and 7.4% in 2020 (11.5% and 12.3% by tonne-miles) and reach 370 mt through 2020.
- Global gas consumption grew by 4.7% y-o-y in 2018, with the role of LNG expanding to 11% of total demand and 35% of total trade (2000: 6% and 26%).
- Continued diversification of LNG trade, with 317 bilateral trading routes in 2018 (2008: 98).
- Recent export growth dominated by Australia (2018: 44% of export growth) and the US (33%). Australia forecast to overtake Qatar as the world’s largest LNG exporter in 2020.
- Chinese imports increased by 38% in 2018 to reach 54mt, accounting for 60% of global expansion. Our soon to be released “China LNG in 2030” suggests imports could reach 186mt by the end of next decade.
- Our projects database shows 93mtpa of export capacity under construction, and a further 313mtpa at the FEED stage. Our new “LNG Sector Update” (available on Shipping Intelligence Network) provides monthly updates on all future projects.
- LNG carrier fleet capacity grew by 11% during 2018 (June 2019: fleet totals 570 vessels / 85.0m cbm) and we forecast growth of 5.6% and 6.9% in 2019 / 2020. Our longer term modelling suggests that the LNG fleet will outnumber the VLCC fleet by 2026.
- A record 77 LNG carriers (68 >40,000cbm) of $12.7bn were ordered in 2018, almost 90% of which were contracted at South Korean yards.
- By June 2019, the LNG carrier orderbook stood at 141 ships of 21.1m cbm and $24.5bn, equivalent to 25% of fleet capacity, with 40% of capacity on order Greek owned.
- Strong gains in charter rates across 2018 impacting the ~20% of the fleet on the spot market, with spot rates for a 160,000cbm DFDE vessel averaging $88,692/day, up 93% y-o-y. Slight softening of rates in 1H 2019 although supply / demand fundamentals in 2019-20 look supportive.
- FSRUs playing a growing role, accounting for 12% of current regasification capacity and 24% of export capacity under construction.
- Some recent positive developments in the FLNG sector, with encouraging longer-term potential.
- Further expansion and potential in the small-scale LNG sector.
- Interest in alternative fuels beginning to gain traction. LNG fuel capable adoption stands at ~3% of the world fleet and ~16% of the world orderbook by tonnage. We estimate that 3% to 4% of world tonnage will be LNG fuel capable through 2020, albeit the majority is still in LNG carrier sector. LNG infrastructure is also ramping up, with number of ports globally with LNG bunkering increased from ~20 to ~100 in past five years.
Source: Clarksons Research